Title: Development of an inventory model for two suppliers with random capacity considering supply disruption

Authors: Imtiaz Ahmed; Ineen Sultana; Abdullahil Azeem

Addresses: Department Industrial and Production Engineering Bangladesh University of Engineering and Technology, Dhaka, Bangladesh ' Department of Mechanical and Production Engineering, Ahsanullah University of Science and Technology, Dhaka, Bangladesh ' Department of Industrial and Production Engineering, Bangladesh University of Engineering and Technology, Dhaka, Bangladesh

Abstract: Supply disruption occurs for diverse reasons including transportation problem, equipment failure, raw material shortages, natural calamities etc. As a result supplier may become unavailable at random times for random time length. In addition, suppliers may also have random capacities leading to uncertain yield in orders. Again under random supplier capacities, the retailer should order from a number of suppliers in order to diversify the risk associated with shortages. The objective of this paper is to develop an inventory model for two suppliers with random capacities considering supply disruption. A modified (Q, r) model is developed to tackle the problem of future supply uncertainty in response to the demand generated by Poisson process. Two suitable optimisation algorithms are applied to search for the optimal values of the decision variables which are state dependent order quantities and reorder point to minimise the cost per unit time. A hypothetical example and its solution are then provided to have a better understanding about the demonstration of the proposed model. Finally, sensitivity analysis is also carried out to have better insights about the model developed.

Keywords: supply chain management; SCM; disruption management; inventory modelling; random capacity; continuous time Markov chain; supply uncertainty; genetic algorithms; Nelder-Mead simplex; inventory management; supply chain disruption.

DOI: 10.1504/IJLSM.2017.080630

International Journal of Logistics Systems and Management, 2017 Vol.26 No.1, pp.57 - 84

Received: 15 Jul 2015
Accepted: 07 Nov 2015

Published online: 01 Dec 2016 *

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